On Thursday 20 February President Goodluck Jonathan moved to suspend the Governor of the Central Bank, Lamido Sanusi. The suspension did not come as a surprise as relations between the President and the Governor had deteriorated rapidly over the previous six months. However, it has undermined the credibility of Goodluck Jonathan’s administration – at least in the eyes of the international community and his domestic critics, who fear that Sanusi has been removed to facilitate corruption and inappropriate government expenditure in the run-up to the 2015 general elections.
Lamido Sanusi was first appointed by President Umaru Yar’Adua in 2009. Although he had relevant experience as a CEO of the First Bank of Nigeria, he was initially seen as a political appointment, intended to extend the President’s control of the commanding heights of the Nigerian economy. But Sanusi’s willingness to implement far-reaching reform of the country’s banks earned him respect both at home and abroad. As part of his attempts to clean up Nigeria’s financial sector – which had developed a reputation for poor governance and instability – he mandated banks to achieve a higher level of capitalisation and forced a number of his former colleagues to resign.
The Governor’s efforts were widely applauded by the international community and foreign investors. When President Goodluck Jonathan succeeded Umaru Yar’Adua and appointed the respected Dr. Ngozi Okonjo-Iweala – a former Managing Director at the World Bank – as Finance Minister, international donors hailed the emergence of a new “technocratic” governance structure.
But Sanusi’s populist grandstanding and willingness to take on some of Nigeria’s most powerful political and economic brokers also made him unpopular with influential figures within the ruling People’s Democratic Party (PDP). Days before he was suspended, Sanusi had publicly embarrassed the President and the Petroleum Minister by alleging that the Nigerian National Petroleum Corporation (NNPC) had failed to account for $20 billion in oil revenues generated between January 2012 and July 2013.
In response, PDP leaders accused the Governor of deliberately airing the government’s dirty laundry in public in order to provide ammunition for the opposition in the run up to general elections that are due to be held in February 2015. Their evidence for making this claim was that some of Sanusi’s closest friends have joined the recently formed All Progressives Congress (APC), which represents the biggest threat to the PDP’s authority in a decade.
For his part, President Goodluck Jonathan has attempted to play down over Sanusi’s departure in two ways. First, he has claimed that Sanusi was not removed for political reasons but because of a number of allegations of improper conduct that have been made against the Governor. These include violating the Public Procurement Act, failing to report his financial arrangements, and spending state resources inappropriately. Second, the President has pointed out that Sanusi is only suspended and can be reinstated if he proves to be innocent on all charges.
This approach may have satisfied some of the President’s supporters, but it did little to reassure world markets. Following the announcement of Sanusi’s suspension, there was a sharp fall in the interbank Naira rate, forcing the government to temporarily close foreign exchange and fixed income markets. It is believed that Sanusi’s temporary replacement as Central Bank Governor, Sarah Alade, spent $2 billion over just 4 days in a bid to protect the Naira.
The row rumbles on. Although Sanusi has stated that he has no desire to go back to his former job, he has also applied to the High Court in Abuja to ‘make an order of interlocutory injunction restraining the defendants from obstructing, disturbing, stopping or preventing him, in any manner whatsoever, from performing the functions of his office as the CBN governor and enjoying in full the statutory powers and privileges attached to the office.’
The case is unlikely to be resolved in Sanusi’s favour, but the pressure on the President is also unlikely to let up. On 25 February, the Finance Minister asked for ‘urgent action with regard to an independent forensic audit of conflicting claims of unaccounted funds made by the Nigerian National Petroleum Corporation (NNPC) and suspended Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamdio Sanusi’. Although it was couched in careful language, the President will not have been pleased with these remarks, which appear to tacitly support the former Central Bank Governor. But having suspended Sanusi he finds himself constrained, because to fire the Finance Minister at this point would seriously undermine confidence in the Nigerian government, and by extension the economy.